Bad contractor botches job, issues debt collection threats

Do you have to pay for unfinished work?

Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

Dear To Her Credit,
I had new windows fand doors installed earlier this year. The job was less than satisfactory; in fact, they damaged my kitchen counter plus the siding on my house.

I had paid with a credit card (American Express), so I stopped payment on the last amount owed the installation company. The company did not respond to the issues I reported to American Express and, after two months, they removed the charge from my bill.

Now the installation company has sent me a past-due notice. Since the installation problems have not been resolved, I have not paid. Plus, I have filed a complaint with the Better Business Bureau.

My concern and question: I'm afraid the installation company will turn my bill over to a collection company, thereby negatively impacting my excellent credit. What, if anything, can I do to further protect myself? Must I pay the bill to ensure my credit rating is not impacted? (If the company fixes the problems, I will pay them.) -- Krista

Dear Krista,
The threat of being sent to collections and having a negative mark cast on their credit report has sent many disgruntled customers running for their checkbooks, regardless of how unsatisfactory the goods or services they received. In your case, where it sounds like The Three Stooges have been muddling around on your house, I hope you don't give in so easily.

According to Georg Finder, an independent credit evaluator, a contractor can indeed send your account to a collection firm, even when you have voiced your concerns with his work. However, that doesn't mean you should give in and pay. You can and should defend yourself against bills for shoddy workmanship.

Finder says, "If it is a reputable collection firm, it will contact her prior to putting anything in her credit report. One of the ploys of a collection agency is to work out something along the lines of 'If you pay this now, it will prevent something being reported in your credit report ...'"

Once the collection company hears your story, it may lose interest quickly. Finder recommends, "If she gets such a call, and provides the collection agency with proper proof of what's happened, it will not be pursued by that collection agency."

Of course, then the construction company can just send it to another collection company. You may need to step it up a level. Go to the Better Business Bureau and file a complaint, just to be on record.

You should also craft a written statement of your case. List the defects and what needs to be done to correct them, and send a certified letter to the construction company, giving the people there a chance to fix it or otherwise reply.

The next step, if necessary, is legal representation. "If there is collection action, then she has a proper case to take to a Fair Debt Collection Practices Act (FDCPA) specialist law firm who will take her case," says Finder. "She will most likely get expungement of the matter from the credit report and $1,000 for her trouble. The attorney will get paid from the collector and the construction company -- not expecting any money from her."

A construction contractor could also put a lien on your property -- in fact, he may have done so already. This is called a "mechanic's lien," and it is intended to help contractors get paid for their work. It would be attached to your home like a mortgage, and if you do not pay, the contractor could eventually foreclose on your house.

I recommend you seek qualified legal help if a lien is placed on your home. An attorney can help you file the necessary paperwork to make sure the problem is resolved and the lien is removed.

Many people would be tempted to go ahead and pay the bill just to stop dealing with it -- or to keep Larry, Moe and Curly from swinging hammers anywhere near their property again. If everyone gives in and pays for poor quality or negligent work, however, contractors like this one just move on to the next victim. By following through, you'll not only get your house put back together again, but you can help convince this contractor to straighten up his act.

Meet CreditCards.com's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

See the online credit card applications for details about the terms and conditions of an offer. Reasonable efforts are made
to maintain accurate information. However, all credit card information is presented without warranty. When you click on
the "Apply Now" button, you can review the credit card terms and conditions on the issuer's web site.

Related Sites

ADVERTISER DISCLOSURE CreditCards.com is an independent, advertising-supported comparison service. The offers that appear
on this site are from companies from which CreditCards.com receives compensation. This compensation may impact how
and where products appear on this site, including, for example, the order in which they appear within listing categories.
Other factors, such as our proprietary website's rules and the likelihood of applicants' credit approval also impact
how and where products appear on the site. CreditCards.com does not include the entire universe of available financial
or credit offers.

Advertiser Disclosure

CreditCards.com is an independent, advertising-supported comparison service. The offers that appear on this site are from companies from which CreditCards.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within listing categories. Other factors, such as our own proprietary website rules and the likelihood of applicants' credit approval also impact how and where products appear on this site. CreditCards.com does not include the entire universe of available financial or credit offers.